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Saipem SpA Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- The company has increased its operating and maintenance level due to the award of the Kaminho FPSO contract.
- The company has generated €505 million of free cash flow post repayment on lease liabilities in 2024, outperforming its guidance.
- The company has a strong visibility on its top line for the next two years, thanks to its level of backlog.
- Financial expenses stood at €85 million in 2024, almost half from the previous year, due to the reduction in net financial expenses and interest income on cash.
- The company's learning curve has significantly improved, reducing the number of days required for each socket.
- Income taxes increased by €45 million compared to last year to €190 million, implying a tax rate of 38%.
- The company is facing a mismatch in terms of cos expectation between the demand and what it is offering.
- The company is facing a tight market for J-lay towers.
- The company expects a substantial increase in EBITDA and margins driven by a further shift of the backlog toward Offshore E&C and the completion of the remaining legacy projects.
- The company expects cumulated operating cash flow post-repayment of lease liabilities for the next four years to exceed €3.7 billion.
- The company does not rely on pricing surprise.
Q&A Highlights from Saipem SpA Earnings Call Q4 2024
- Analyst asked about the extra provision for the legacy projects and the expected cash outflow in the next two years.
- Paolo Calcagnini, the company's CEO, stated that they do not provide details of individual contracts.
- Paolo Calcagnini, the company's CEO, stated that they do not provide details of individual contracts.
- Analyst asked about the company's strategy for Onshore E&C, specifically the new value over volume, de-risking strategy.
- Alessandro Puliti, the company's CFO, explained that the strategy is under execution, with an increase in operating and maintenance levels and a focus on tendering for new opportunities. He also mentioned that the company is expanding its operating and maintenance services to the onshore portion of its work. Additionally, he noted that the company is well-positioned to enter the PMC segment due to its experience in EPC contracts.
- Alessandro Puliti, the company's CFO, explained that the strategy is under execution, with an increase in operating and maintenance levels and a focus on tendering for new opportunities. He also mentioned that the company is expanding its operating and maintenance services to the onshore portion of its work. Additionally, he noted that the company is well-positioned to enter the PMC segment due to its experience in EPC contracts.
- Analyst asked about the company's order intake and whether they are being conservative with their estimate of €50 billion.
- The company expects to continue seeing activity in the Middle East and is participating in several bids in the region. They also see potential for new floating units in the Far East and new bids for new floating units in South America.
- The company expects to continue seeing activity in the Middle East and is participating in several bids in the region. They also see potential for new floating units in the Far East and new bids for new floating units in South America.
- Analyst asked about the market capacity for subsea installation, particularly in S-lay and J-lay.
- The company is not aware of any new tonnage or capacity coming to the global market that is currently under construction. They do not have access to the Far East market, but they are not aware of any J-lay towers being under construction. They may reinstate the J-lay tower on their Saipem 7000 for planned activities, which indicates the tightness of the market.
- The company is not aware of any new tonnage or capacity coming to the global market that is currently under construction. They do not have access to the Far East market, but they are not aware of any J-lay towers being under construction. They may reinstate the J-lay tower on their Saipem 7000 for planned activities, which indicates the tightness of the market.
- Analyst asked about the security bonds and their impact on provisions.
- Paolo Calcagnini explained that the company accounts for all the costs expected in the entire life cycle of a project, including the bonds, when closing their accounts. He stated that the company has already accounted for all the costs and does not expect a significant impact on provisions.
- Paolo Calcagnini explained that the company accounts for all the costs expected in the entire life cycle of a project, including the bonds, when closing their accounts. He stated that the company has already accounted for all the costs and does not expect a significant impact on provisions.
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